Modern imperialism and the working class

First, it brought together those scholars with the latest works on modern imperialism. Both John Smith’s new book and that of Tony Norfield have been reviewed on my blog. Smith’s book has won the prize from the Monthly Review and Tony’s has been included on the short list for the Isaac Deutscher prize for the best Marxist book of the year, previously won by many eminent leftists and Marxists. And Lucia Pradella had a book Globalization and the Critique of Political Economy: New Insights from Marx’s Writings, Routledge, 2014 that was also shortlisted for Isaac Deutscher in 2015.

The other reason, of course, was Brexit. The decision of the British people to vote in a referendum to leave the EU brings into focus the history of British imperialism and its impact on the consciousness of the British people. And the workshop spent some time considering the importance of British imperialism in the 21st century. It may be only the 5th largest economy by GDP, but as Tony Norfield has shown, it is still second only to the US as an imperialist power, when finance and military might are considered. The split in the British ruling class between its past imperialist ambitions and its recent need to integrate with Europe has come to a head with Brexit.

So the workshop brought together a perfect trio to develop the latest idea on the nature of modern imperialism. Lucia Pradella linked Marx’s own thoughts at the birth of ‘globalisation’ from the 1870s; John Smith analysed the nature of exploitation that imperialist economies impose on the ‘periphery’; and Tony Norfield revealed the forms of economic and political hegemony from which the top imperialist economies increasingly reap the majority of their profits.

Lucia showed that Marx developed a theory of imperialism that anticipated in many ways later debates on imperialism including this one (Imperialism_and_capitalist_development_i). Marx took a step further with respect to Lenin and contemporary theorists of imperialism. On the one side, Marx grounded his analysis of imperialism in his value theory, and on the other side, he saw processes of imperialist expansion as being subordinated to the overall tendencies of capital accumulation. His approach is still relevant for understanding the interrelationship between global and national processes of impoverishment under neoliberalism and after the outbreak of the recent global economic crisis.

Lucia argued that Marx did not analyse a national economy but assumed a world system. So that which was later defined as ‘imperialism’ is the concrete form of the process of ‘globalisation’ of the capital of the dominant states. Marx recognised that the capital of the leading states leads towards dominance on the one hand; but on the other, as competition is capital’s very essence, accumulation revives inter-capitalist and inter-state rivalries.

In the age of mechanical industry, the external market prevails on the internal, impelling the annexation of new countries and increased rivalries among the industrial powers. This means exactly what Rosa Luxemburg said: that “capital needs the means of production and the labour power of the whole globe for untrammelled accumulation; it cannot manage without the natural resources and the labour power of all territories”. So whereas, at the beginning of the 20th century the vast majority of the world population was peasant or lived in rural areas, the world today has become overwhelmingly urban. This is one of the most fundamental and dramatic changes in human history.

Marx already recognised that this globalisation process would be driven by centralisation and concentration of capital and the backing of the state. In his 1879 letter to Danielson, Marx claims that railway companies had been the first historical example of joint stock companies and the starting point of all other forms, starting with banking companies. Their formation took place with or without state support: only in England was it possible without it, thanks also to the reinvestment of huge colonial profits. In other countries, like the US, this process was supported by the state with subsidies, concessions and tariffs.

However, the long-run combined effect of concentration and centralisation is an increase in capital’s organic composition and a relative reduction in the demand for labour, which coexists with an absolute increase of the number of proletarians. As living labour is the only source of value, this provokes the tendency of the rate of profit to fall and increases exploitation globally.

For me, this shows the connection between imperialism and crises. For how does the bourgeoisie get over crises? On the one hand, by enforced destruction of a mass of productive forces; and on the other, by the conquest of new markets and by the more thorough exploitation of the old ones.

Indeed, in Volume III, Marx explains that investments in colonies, where the rates of profit were higher, are a factor that counteracts the law of the falling rate of profit. Over-accumulation and the resulting decline in profit rates and economic crises explain increasingly attempts by corporations and states to secure additional sources of profits, by means of monopolies (especially over raw materials), new outlets for foreign investment, currency manipulations, speculation, and, ultimately arms spending .

Readers of my blog will be well aware of John Smith’s compelling contribution to the analysis of modern imperialism with his book. John has presented a powerful set of arguments that expose the ‘myth of economic convergence’ claimed by mainstream economics and the apologists of capital. There is significant and widening global labour arbitrage with the shift of global production to low-wage countries. And this is the most important global transformation of the neoliberal era.

Blog readers will know that John argues that imperialist exploitation is now predominantly ‘super-exploitation’. Super exploitation in Marx’s definition was where wages were held down below the prevailing value of labour power. John argues that this is revealed in the periphery (the South) in that rates of exploitation are higher there than in the North, contrary to the ‘Euro Marxist’ schema that higher productivity levels in the North should deliver higher exploitation rates. Other forms of exploitation under capitalism: absolute surplus value (namely through maximising the working day); or relative surplus value (namely lowering the cost in hours for maintaining the labour force in a given day); according to John, these have become secondary forms of exploitation under modern imperialism.

In previous posts, I have outlined where I differ with John’s analysis. So I won’t repeat my doubts here, although I did at the workshop. What came out of that discussion is that there is a difference between those who see imperialism as a world economy divided between oppressor and oppressed nations (or peoples, said John) and those who have a more ‘articulated’ analysis like myself; and between those who reckon the working class of the North do in some way gain value from the super-exploitation of the South and those who do not, like myself.

Tony brought some key insights into understanding the nature of modern financial systems and what role they play in the working (or non-working) of capitalism. Again, I have dealt with Tony’s analysis in my review of his book. But Tony’s address again emphasised the important role of British imperialism. British capitalism lost its hegemonic status a hundred years ago but in the post-war period its financial sector has maintained its global status while its manufacturing base diminished. I have described Britain in the past as the world’s largest ‘rentier’ economy. That’s an old-fashioned French word for an economy based on sucking up ‘rents’ through the monopoly ownership of capital (or land) from the profits of the productive sectors. Both the sectors exploit labour but the rentier economy relies on its financial and legal monopoly to take a share of the surplus value appropriated from labour.

One of the consequences of Britain’s rentier economy is its ambiguous relationship with European capital, in particular Franco-German capital and the European Union. British imperialist strategists have looked across the Atlantic to the US for partnership in financial power but also to Europe for trade and investment. The UK is the piggy in the middle between the US and Franco-German Europe. That has now come to a head as British capital considers whether it wants to break with the EU or not, as Europe stutters along in its long depression.

At the workshop, I was asked to provide commentary on the speakers. The words above cover that. But I also offered my own two cents. In my view, imperialism is an historical necessity because it follows from the requirements and conditions of capital accumulation. This was the fundamental premise of Luxemburg’s book on Imperialism. Unfortunately, her own theory did not explain why the export of capital takes place from one capitalist land to another capitalist land, which today is one of the key features of modern imperialism.

Lenin, in his famous book on Imperialism, also does not explain this, apart from saying that: “The need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the poverty of the masses)” and “capital cannot find a field for ‘profitable’ investment.” But iIt is not enough to account for capital export in terms of the lack of profitable investment opportunities at home, as the liberal economist and pioneering critic of imperialism, John Hobson put it. As Henryk Grossman retorted: “[W]hy,” then, “are profitable investments not to be found at home?…..The fact of capital export is as old as modern capitalism itself. The scientific task consists in explaining this fact, hence in demonstrating the role it plays in the mechanism of capitalist production.”

It is the race for higher rates of profit that is the motive power of world capitalism. Foreign trade can yield asurplus profit for the advanced country. From about the 1980s onwards, the rate of profit in the major economies reached new lows, so the leading capitalist states again looked to counteract Marx’s law through renewed capital flows into countries that had massive potential reserves of labour that would be submissive and accept ‘super-exploiting’ wages. World trade barriers were lowered, restrictions on cross-border capital flows were reduced and multi-national corporations moved capital at will within their corporate accounts. This explains the policies of the major imperialist states at home (an intensified attack on the working class) and abroad (a drive to transform foreign nations into tributaries).

It was a similar story in the previous period of ‘globalisation’ in the late 19th century. The UK was the leading imperialist power of the 19th century. The great economist J Arthur Lewis summed up the driver behind Britain’s imperialist ambitions in the late 19th century. “In the low level of profits in the last quarter of the century we have an explanation which is powerful enough to explain the retardation of industrial growth in the 1880s and 1890s… we have here also, in low domestic profits, the solution to the great mystery of British foreign investment, namely why Britain poured so much capital overseas… home industry was so unprofitable in the 1880s through the squeeze on profits between wages and prices.” Lewis, Deceleration of British Growth, p28.

At the workshop, there were the beginnings of discussion about the role of the working class in the major imperial powers. Some speakers were extremely pessimistic about the consciousness of the British or American working class to want to change society. The view was that they were embedded into the imperialist nexus, with a substantial ‘labour aristocracy’ basically living off the surplus value extracted from the South and transferred to the North. So the only hope for change would come from the growing proletariat of the South, as Cuba in the 1950s showed and presumably Latin America or other parts of the South would do now.

In a way, this is a revival of the so-called ‘dependency theory’, where it is argued the rich imperialist powers are rich only because of the poor oppressed nations and economies. To this is added the argument that the working class of the North are better off only because of the super-exploitation of the South and so are no longer a progressive force in the struggle to end capitalism.

Well, I argued against that view. First, Marx’s theory shows that there will be a tendency to equalise the rate of profit between capitals (even under monopoly capital) – indeed this is how the higher rates of exploitation in the South end up in the profit rates of the North. But this process does not touch the sides of the wages of the workers of the North – it is a redistribution of surplus value between capitalists (and capitalist states).

Imperialism has two Achilles heels. The first is the tendency of the rate of profit to fall as capitalism accumulates. Indeed, imperialism is a major counteracting factor to that most important contradiction of capitalist accumulation. The second is the proletariat – the gravediggers of capitalism – who are still growing in size across the world. John Smith showed that global proletariat has never been larger in the history of capitalism. In that sense, Marx’s prophecy in the Communist Manifesto 160 years ago is confirmed. Sure, the majority of the proletariat is now in the South and not the North. But, in my view, that does not mean the workers of the North will play no role in ending capitalism. On the contrary, they are the key to ending imperialism in its centre.

60 Responses to “Modern imperialism and the working class”

The most essential debate indeed. I do not agree with one worldwide rate of profit, neither empirically nor theoretically. There is a fight to get rent and since rent is inseparable from profits, it will appear as different profit rates. Where does Marx show that rents will equalize even under ‘monopoly capitalism’ (surely not his term)? I have worked with all this and come to a sort of way of commingling it, also through finance which in these theories, also John Smith’s, becomes an appendix or afterthought, rather than deeply ingrained in the whole imperialist mess. — But I so much agree with the central role of The City of London (now getting its arms into China through Hong Kong). I miss a bit more about Brexit in the piece.

Karen You are right that I needed to develop the role of rents in the argument about transfers of surplus value from the periphery to the centre under imperialism. It was not discussed at the workshop. I meant by ‘monopoly capitalism’ that multi-nationals and the top imperialist states can restrict entry into profitable fields of accumulation by tariffs, financial control and patents on technology etc – forms of monopolisation. But just as in a national economy, there is a limit to monopoly rents as imperialist rivalry eventually leads to new competitive forces.

I might argue that at least in certain circumstances “rents” are indeed the very mechanism for the equalization of rates of profits, serving to offset the lower rates of profit inherent in capitals of a greater organic, i.e. technical and “constant” (or fixed) value composition.

For example take the movement of oil prices from the 1992 period on, and the overall rates of profit in the upstream (extraction, exploration, development) petroleum industries.

I think both mr. Roberts and mr. Norfield views are complementary. There is indeed an international division of labour, where, as a whole, the working class of the global south is the most superexploited – but mr. Roberts is right when he states that this social contract has an expire date (it’s already expired, now it’s a matter of dismantling it.)

I understand the term “working class’ aristocracy” – we use this term here in Brazil too (mainly to designate the metalworkers). But this term is clearly pejorative, doesn’t reflect the reality of the matter. A more precise term would be a social-democratic pact, that happened in the global north during the post-war period: Norfield showed a lot of historical documents that prove the imperialist face of Labour since the beginning.

The American working class showed that they are ready to double the bet on imperialism when the selected HRC over Bernie Sanders. Corbyn is facing a coup for no reason – probably because he is not imperialist enough.

Right now, it’s rational to state that the working classes of the central powers will have a far-right option ready for them as a last resource. That’s the elephant in the room (specially for the American people): enforce their supremacy over the rest of the world until it’s not possible anymore or jump into the unknown and choose a socialist option? I think this demonstrates the post-war social pact has expired, but it’s not crumbled yet. Only when the far-right option is depleted the working classes of the global north will have the material conditions to develop a class conscience.

Did the working class of the USA choose HRC over Sanders? I’m not so sure. There is, for example, a documentary about the California primary which suggests that Sanders might have won if all of the votes had been counted.http://www.nakedcapitalism.com/2016/07/uncounted-the-true-story-of-the-california-primary.html
Moreover, there are other ways to nullify the will of the people–ways used by the Demoratic Party and in general. (EG with Democrats, so-called “super deligates”.)
So, I doubt whether we do know what working people would choose if they were given the chance. On the other hand, of course it is true that in the USA, just as in England, there is a myth of past greatness that appeals to many people. That has influence and leads people to vote for Trump. However, I am not convinced that people are stuck on that idea and cannot change.

If we are going to lump those nations together we should ask why the US worker needs $31 per hour while the Chinese worker only needs $3.35 per hour. Until we have established those principles we cannot proceed any further into this question.

Why do we need to ask that? Maybe it’s because wages have always been higher in the US than in China, or England for that matter. Maybe it’s because the US worker needs to buy a car to get to work as public transportation sucks.

I think we can presume that labor is in fact compensated at its value, at its necessary time of reproduction, in each of the 3 cases, unless we have evidence that somewhere, somehow, and for an extended period of time, wages in China have been held below the amount necessary to reproduce the laborer.

What should be added is that the working day for all 3 cases is the same, 8 hours.

The fund of subsistence is made not only of commodities that are essential for the physiological survival of the worker, but also of the commodities that make up for the habits of the worker (Marx gave the example of cigarettes in Book II).

In America, culture dictates that everyone must consume the latest goods. By creating a more consumist culture in the imperialist countries and a more frugal culture in the over-exploited countries, you can, relatively, super-exploit the workers from the “south” relative to the ones from the “north”, since subsistence is as much a matter of culture (the “spirit”) as it is a matter of physiological survival. The important thing is, however, the total wealth produced in the world market, and how it is distributed.

And yet on that view there is a transfer from the the productive to the so called non-productive worker (assuming that really is the issue). so why not from the more productive to the less productive worker as things even out across the capitalist economy?

It wasn’t a randomly silly remark above (silly maybe, but not random), because John Smith made much the same point when you talked about the time it took for the labourer to reproduce himself. I don’t see what his answer was lacking.

If you want to look at it in terms of productive/non-productive labour, however we choose to define it, you have more people in our part of the world compared to the poor South that never reproduce themselves in a hundred years, because they’re in the non-productive category.

If you want to talk about it in terms of what the worker needs, then many of us can just walk a couple of blocks from our own house and find workers who miraculously need poorer food, poorer housing, poorer transportation, poorer health coverage, poorer education etc than we do. Or alternatively, if we walk in the other direction, we come upon people who swear they couldn’t make it through a single day in our shabby hood. Is that a real measure of our needs, or of the work we perform?

And as for there not being bribery of the working class and a worker aristocracy, have you ever listened to a neoliberal politician or economist? It’s a good thing that the ”shitty” jobs go to Bangladesh, they tell us because it frees up the aristocratic workers up north for better, higher paid, more interesting, to a great extent non-productive work. What inside of us are they pandering to?

And sometimes they do deliver on their bribes. Just because most of us get cheated on the deal in the end it doesn’t mean there isn’t bribery and constant attempts to create class division within the working class(es) going on.

The significance of these stats hang on whether you are talking about the net labor productivity or gross labor productivity associated with the manufacture of one ton of steel. The stats used by mainstream economists generally do not make or even recognize this distinction. (For the economy it is GDP per hour of labor, so each sectoral component must be measured on a compatible basis.)They therefore measure gross productivity and therefore gross output per hour worked. Only if the percentage of constant capital in the advanced nations consumed is equal to the constant capital similarly consumed the periphery, would this distinction be self-cancelling. The ratios of gross productivity (Center / Periphery) can exceed the the ratio of wages (Center /Periphery)while still being compatible with a ratio of net productivity (Center /Periphery) that is less that the wage ratio (Center/ Periphery).

Putting it differently: since there is no reason to assume that the ratio of gross productivity to net productivity (Center / Periphery) is equal to the ratio of net productivity (Center /Periphery), we really can’t draw enough information from your example to suggest that workers in the periphery are less exploited than those of the center.

That’s a point, and I’ll get some more info. But we also know the history of the reduction of production time in the US from 10 hours/ton to 1.9 hours/ton– a 90% + reduction in employment; a 90% + reduction in working hours; a 45% reduction in gross output (tonnage); a 30% reduction in production workers wages, unadjusted for inflation– just a straight up comparison, between 1970 and 2014.

“If you want to talk about it in terms of what the worker needs, then many of us can just walk a couple of blocks from our own house and find workers who miraculously need poorer food, poorer housing, poorer transportation, poorer health coverage, poorer education etc than we do. Or alternatively, if we walk in the other direction, we come upon people who swear they couldn’t make it through a single day in our shabby hood. Is that a real measure of our needs, or of the work we perform?”

Of course, it’s not a measure of need. I’m not arguing about need. I’m wondering how the transfer of value works say in the steel industry, globally.

If the argument is that the wage in the US (or South Korea for that matter) is so much higher based on a subsidy from less developed (3rd world) countries, based on “imperialism” the global export of capital, or whatever, then I’d like to see how it works in the market place. I’d also like to know why this:

“From about the 1980s onwards, the rate of profit in the major economies reached new lows, so the leading capitalist states again looked to counteract Marx’s law through renewed capital flows into countries that had massive potential reserves of labour that would be submissive and accept ‘super-exploiting’ wages. World trade barriers were lowered, restrictions on cross-border capital flows were reduced and multi-national corporations moved capital at will within their corporate accounts.”

correlates with this: “This explains the policies of the major imperialist states at home (an intensified attack on the working class)” rather than its opposite?

We KNOW, and can follow the source, the origin of the CEO’s salary. We can trace the process that results in company profits, and the transformation into value from workers labor power… and the transformation of that value into profits.

So if surplus value is the source for such transfers, where is greatest aggrandizement of surplus value taking place in the three cases?

Yes, the tendency is that this “social-democratic pact” made between the working classes and the capitalist classes of the imperialist powers to erode, and for the rate of exploitation of all working classes to equalize over time (i.e. everybody will be superexploited). Imperialism is just a historically specific phase of capitalism.

At the workshop, there were the beginnings of discussion about the role of the working class in the major imperial powers. Some speakers were extremely pessimistic about the consciousness of the British or American working class to want to change society. The view was that they were embedded into the imperialist nexus, with a substantial ‘labour aristocracy’ basically living off the surplus value extracted from the South and transferred to the North.

jim:
I point out that too many academic Marxists have not (dialectically, the use of the categories) understood Marx. Therefore, are incapable of educating the working class. Their pessimism arises from their own omissions.

Marx continues to be demonised by the ruling capitalist class precisely because he scientifically provides the working class with the truth of the relations between themselves and the bosses. That is, Marx provides the working class with the truth that reveals exactly what determines the relations of domination and servitude in capitalist society.

I don’t see academic Marxists (nor Mason nor Piketty etc. etc. etc.) being demomised. Precisely because they have little scientific knowledge of the contradiction between FOP and ROP. Collectively, from the ruling capitalist class point of view…safe pairs of hands.

The unfolding contradiction between the social forces of production and the social relations of production, develops, for example, the awareness of the working class, as a class. That is, it develops an ever-growing conscious universal form.

As capital declines, the relations between the classes become polarised and irreconcilable. The struggle within a disintegrating society, will be decided by the increasingly aware majority. A rational majority who will, increasingly, recognise the necessity of freeing labour, that is, itself, from the yoke of capital.

Evolving working class consciousness (look at political upheaval…everywhere) will, without, for example, the tomes of left academia, naturally gravitate to Marx.

‘Marx: Capitalism No Future’ restates, in an easy to read manner, the basic argument of Capital. The text makes use of Marxist categories, their use effortlessly bringing the reader to awareness of the essence of change in capitalist society.

Jim’s comment is a good entry point for my own. Haven’t read yet Tony Norfield’s fine-looking book, but I have read John Smith’s. Smith’s contributions on the issues of both outsourcing and as a consequence, GDP accounting are useful and praiseworthy. I’d call his labor arbitrage in value terms the “surplus-profits of commercial arbitrage”, formerly known by Marx, through James Steuart, as “profits upon alienation”. That was their pre-capitalist merchant trader form. The now continue to exist on a thoroughly capitalist basis, as too does landed property and its rent. However Smith’s presentation is couched within a defense of the old “development of underdevelopment” theory – closely associated with Smith’s publisher, MR – whose chief dogma is that the imperialist country club is permanently closed to entry by developing countries. This theory cannot then explain two phenonoma: the developmental possibilities of countries like the PRC, or even Taiwan, South Korea, etc. (Smith explains these latter as “US policy outcomes”), and conversely the possibility of the emergence of the “development of underdevelopment” *within the imperialist club itself*.

The dogma is then an emphatic rejection of the theory of *uneven and combined development*. It argues that combined development can never occur outside the imperialist club, and uneven development – that would include uneven development of the imperialist country working classes – can never occur within the imperialist club.

Its political implications are obvious: the imperialist working classes are hopelessly reactionary, class struggle addressed to the internals of the imperialist countries – as opposed to progressive “tag-a-longs” to class struggle movements in developing countries – is futile.

Now a section of the working class of the imperialist countries *does* feed off the super-exploitation of the developing world’s working classes, and *is* pro-imperialist politically. However the tendency is for what I call the “surplus wage” – money wages paid above the value of labor power for whatever structural reason, the basis for imperialist working class privilege, savings for homeownership, etc. – to decline and disappear. And that has what’s been happening since the end of the 1970’s.

Hi Michael. You wrote, “First, Marx’s theory shows that there will be a tendency to equalise the rate of profit between capitals (even under monopoly capital) – indeed this is how the higher rates of exploitation in the South end up in the profit rates of the North.”
But in Marx’s theory, costs of production equalises through the movement of capital (investment) into areas where profit is higher. How, on an international scale, would such an equal ization occur between the high organic composition imperialist states and low organic composition periphery without a generalized shift of capital to the South? But in reality production, especially of complex commodities, is still concentrate d in the North. I think an explanation limited to equalisation of profits ignores the transfer of value inherent in monopoly price setting by the biggest monopoly corporations, which are overwhelmingly based in the richest countries.
Regards,
Sam

Equalisation of profit rates is only valid across different sectors of capitalist production, not in the internal division of labour of an individual capital or between individual capitals from the same sector: Ford extracted rubber from South America with overexploited labour and manufactured the engines in America with relatively well-paid workers, but the final product is the same: a car. Both produced the same product, hence the surplus value is calculated upon all of them at the same time.

Our salaries need necessarily go up if we can pay less for our shirts, iPhones and assorted foods. Generally, wealth extracted from the South and brought back may not benefit workers here, but it’s not a logical impossibility in capitalism that it could.

But that doesn’t mean workers here don’t have to fight for it. Bribes and labour struggle are not mutually exclusive. To the contrary.

Now, it seems, a new phase has been reached, where the capitalists don’t need the labour, or even some markets, in the old countries so badly anymore, they’ve managed to cripple the unions, the Soviet Union is gone, much of the class consciousness also, and they are able to pit workers from all the world against each other quite easily. So, naturally there’s not the same need to bribe, or perhaps even ability.

I’m not arguing about bribery, one way or the other. I just want to know where the surplus value is coming from, and at what rate.

There’s no argument about the importance of FDI, and that capital is always attracted to areas where wages, benefits, work rules, etc are less demanding than other areas.

In the case of China, and China’s steel production, most of it is state-owned, and a significant, if not majority portion is unprofitable. I’d like to know why that is. Is surplus value being siphoned away to subsidize wages in the US, or the UK?

“Now, it seems, a new phase has been reached, where the capitalists don’t need the labour, or even some markets, in the old countries so badly anymore, they’ve managed to cripple the unions, the Soviet Union is gone, much of the class consciousness also, and they are able to pit workers from all the world against each other quite easily. So, naturally there’s not the same need to bribe, or perhaps even ability.”

That all started well before the demise of the fSU. In fact it starts after the peaking in the rate of profit in the “old countries” around 1969. And it took, at least in the US and UK, first in the 70s, and then again in the 1980s, the breaking of the workers strikes, followed by asset stripping, downsizing, assaults on unions. If you are saying that’s all based on the need for profits, I agree. If you say, all that is based, in part, on a growing productivity of labor in the “old countries,” I agree. But I think John explicitly rejects that.

But how could it be based on a decline in the “ability” to bribe, as you suggest? Value extracted from the global south at the highest level. How could there be a loss of ability?

i don’t think I see contradiction that you do, and this is a purely logical thing. The class war top down is being waged in both good and bad times, so assaults on unions can take place while profits go up or bribes primarily in the form of the blessings of consumerism are being paid.

The other aspect is more a matter of what empirically took place. I am probably sloppy when calling it all ‘bribes’, but considering what, among others, our host is saying, the rate of profit, in spite of value extraction from the South, might not have recovered sufficiently to offer workers real improvements anymore without sacrificing what gains might have been made in the rate of profit. I think Kliman was saying that when you consider not just wages but all other benefits the workers continued getting their (not fair obviously) share more or less of what there was, up until quite recently at least.

In sum, I am not pretending to know exactly what happened when, but I don’t find it far fetched that both willingness and ability to, let’s not say bribe, but compensate the workers one way or the other could play a role.

This is by the bye, however. The basic point from John Smith that I get from his comments in the previous discussion is that a unit of abstract labour is worth the same everywhere. Talk of how the worker aristocracy of the North are more productive and have more refined sensibilities or whatever than their counterparts in the South, who because of their supposed low productivity and baser needs generally are paid exactly what they are worth (minus what the capitalist rightfully takes) seems to be a notion borrowed from… another kind of economics.

“Talk of how the worker aristocracy of the North are more productive and have more refined sensibilities or whatever than their counterparts in the South, who because of their supposed low productivity and baser needs generally are paid exactly what they are worth (minus what the capitalist rightfully takes) seems to be a notion borrowed from… another kind of economics.”

But nobody’s saying anything like that particularly with the pejoratives implied re “aristocracy,” re “refined” or “baser.” Nobody is making the ideological, or moral judgment that any worker anywhere is “paid exactly what they are worth.”

The question is about the rate of extraction of surplus value.

Are there different rates? If so is the difference dependent exclusively upon the level of wages?

Yes, “human need” is a “common”– kind of why Marx talked of “species being.” But capitalism is not working on a common need, but on the specific value required to command that labor power.

“From about the 1980s onwards, the rate of profit in the major economies reached new lows, so … world trade barriers were lowered, restrictions on cross-border capital flows were reduced…” Modern globalization became large enough to matter from about 1990, when China began a concerted drive to supply huge numbers of workers to foreign capital. Manufacturing in Mexico for U.S. capital really grew, too, from NAFTA, which took effect in 1994.

Yet the real median wage for U.S. workers peaked in 1973. What came later – substantial modern globalization – cannot be the cause of something that began earlier.

But nobody’s saying anything like that particularly with the pejoratives implied re “aristocracy,” re “refined” or “baser.” Nobody is making the ideological, or moral judgment that any worker anywhere is “paid exactly what they are worth.”

I think someone is saying that and making that judgment, maybe not here, but the logic to me is too similar for comfort. The argument is that the workers in the North are more exploited in terms of productivity than those in the South, and further that because of their productivity they are higher maintenance. That line of reasoning leads to the kind of results that the neoclassicals like, i.e. the CEO is even more exploited than the rest of us, and we’re doing the workers in the South a favour by releasing the productive capacities while exploiting them less than we would exploit ourselves.

That logic does, as I think you imply in your last sentence, belongs to capitalism, but not to a critique of it. Please remember that I have tried to stay very narrowly with John Smith’s framing of the issue because I perceived this discussion as a continuation of that debate, so maybe that’s not so useful for your present purposes. But just to make clear, I’ll paste one of John Smith’s comments, where I believe his point is the same as mine you quoted above, and I think it’s valid (note also how Kidron when talking about ‘unit of labour-power’ talks about concrete labour instead of abstract) :

“Michael Kidron was the pre-eminent economic theorist of the ‘International Socialist Tradition’, embodied today by the British SWP, which continues to uphold and repeat the arguments presented in ‘Black Reformism’, the chapter in ‘Capitalism and Theory’ (1972) where he dismisses (and traduces) dependency theory, concluding that “Workers in the North get more because they need more in order to produce much more better. In fact they are relatively underpaid in terms of quantity and quality of their ability to work. They get much more per head than workers in South, but they get much less per unit of labour-power. They are richer, but more exploited.” (p103)

He supports this denial of super-exploitation with a mixture of chauvinism and sophistry: “If there is one outstanding difference between [British and Indian workers] it lies in the different degrees to which they are culturally enriched. The average British worker can be expected to read and drive; he or she will normally be able to handle a wide range of tools and concepts and respond to a wide range of stimuli on the basis of knowledge rather than from personal experience. The Indian worker will not. The average competence of the two are obviously worlds apart qualitatively. The cost of maintaining them effectively – their value – is bound to reflect this difference.” (p100).

He then illustrates his argument with this:

“For example, a truck driver dare not make a practice of sleeping at the wheel and must therefore be able to ensure rest at home and a home to rest in; a bullock-cart driver dare and often does nod off, so his housing is less important to the employer… and his wage will not need to contain as large a housing component. New entrants into a factory in Britain need to be able to read, and their parents’ wages need to contain therefore a child-support and-education component. New mill hands in India need not, and usually do not, read, so the pressure on their parents’ wages is less. And so on and on – there is no end to the comparisons can be made.” (p101)

You might be arguing that China’s steel workers are paid 3.35 an hour because South Korea’s are paid $18/hr or the US worker $31/hour. Or the South Korea worker is paid $18 because the Chinese worker is paid $3.35. You might be right. You might be wrong.

However that works out, where are the greater rates of surplus value extracted, and are those greater rates dependent upon lower wage, and in particular the lower wage in China?

As for Kidron– well it’s complete baloney, ignoring of course the struggles and repression of struggles that account for both the better living conditions of the British worker, and the depressed conditions of the Indian worker– as if capital didn’t impose, preserve, extend the conditions of poverty in India. Just look at how Kidron flips from his nonsense anecdote comparing truck drivers and cart drivers (everybody knows long haul truckers doze off and there is a brisk trade in amphetamines to counteract fatique) to his nonsense about mill hands—

However, the higher wages of truck drivers in the US or the UK are not derived from the lower “wage” of the cart driver; the issue is if the higher wage of the steel worker in the US or South Korea is derived from the lower wage of the steel worker in China.

I don’t know where the argument is made that the wage of the workers in the North comes out of the purse of the worker in the South transparently and in a straight line. JS talks about cheap commodities.

I think the laser like focus on steel production is rather unhelpful and probably distorts the overall conclusions.

There are a whole host of ways that the dominant imperialist nations exploit and take advantage of the smaller and developing nations. Some of that imperialist domination ends up in some small way benefiting the workers at the imperialist centre.

if we look at the individual capitalist organisation:

A capitalist chooses to move production to take advantage of cheap labour and lower standards. The first point to make is that the capitalist doesn’t go to all that effort expecting that within a few weeks the workers wages and standards rise!

So where the capitalist formerly paid X worker £20 p/h to produce commodity A he now pays Y worker £5 p/h for doing exactly the same work (except with lower health and safety standards etc).

This tells us either/or/and 2 things:

a) X worker was being paid well above the value of their labour power

b) y worker is being paid well below the value of their labour power.

If scenario A is based on struggle for better terms and conditions, how was this able to be achieved? The fact that in the imperialist centre they dominate the rest of the world must have helped, must be a factor to take into account. By all means not the only factor but a factor nonetheless.

Scenario B tells us that suddenly all these low paid workers became available for exploitation. Again imperialist dominance opened up opportunities for this super exploitation, but this was only one factor among many.

The overall analysis says the working class in the UK, including those not employed, tend to earn more than even the employed Bangladeshi worker because of various factors, one of which is the dominance of certain nations on the world stage. If we drill down into every industry then there will be exceptions to the rule, but at the aggregate level the rule dominates.

Like all rules the situation is ever changing and at some point there will be a convergence of sorts.

This centre-periphery, or dependency theory that was effectively developed by Stalinists and Third Worldists for their own political purposes is unhelpful, which is why most Marxist economists moved away from it in the 1980’s. Its disappointing to see it being resurrected in some quarters again today, which is probably a reflection of the decline of the left.

Centre-periphery and dependency theory, along with the notion that there is some set of “imperialist” countries ranged against others, is a return to the Mercantilist notions of profit being derived from unequal exchange, as opposed to Marx’s analysis that it arises from the production of surplus value in the production process.

Its tied to the old Stalinist notions about monopolies making surplus profits from unequal exchange derived from their monopoly power, which provided a basis for Stalinists arguing for reactionary policies such as “the anti-monopoly alliance”, and which today flows through into similar attitudes to “anti-imperialism”.

Does unequal exchange exist? Yes, of course it does, just as Marx accepted that some firms make profits as a result of such cheating, or what James Steuart called “profit on alienation”. But, can it explain the source of profits overall, absolutely not, as Marx sets out in Theories of Surplus Value. It can only explain the division of those profits amongst different capitals, and other exploiters.

The notion of super exploitation of less developed economies is then particularly facile on the basis of a Marxist analysis, because for Marx, surplus value is created in production, and the greatest mass of surplus value is created where the level of social productivity is highest. In other words, it is created in the developed not the less developed economies. To try to explain the growth of that huge mass of surplus value, by claiming that it is the result of some “unequal exchange” with less developed economies, that under Marx’s analysis are least able to produce those large masses of surplus value, is then to give priority not to a Marxist explanation of where that surplus value and profit comes from, but is to revert not just to a pre-Marxist position, but to a position prior to Adam Smith and the Physiocrats, to a Mercantilist explanation of profit as arising from unequal exchange!

Moreover, if that explanation were correct, then we would expect to see the producers in the less developed economies become poorer and poorer, and their capital get smaller. That is what happened when monopolistic merchants were able to engage in such unequal exchange against peasant producers in the Mediterranean states in the middle ages, which resulted in the destruction of the producers, and killing at birth of the nascent capitalist production at that time.

But, we have seen the exact opposite. In general the less developed economies have developed. Some have developed more than others, which again is what would be expected on Marx’s basis, whereby capital, only invests in them where it can make higher profits, and those higher profits themselves depend upon th existence of minimum levels of social productivity, development of infrastructure and so on. In fact, not only have some of those economies developed, but some of them have developed to an extent as to be able to surpass the dominant economies of the 19th and 20th centuries.

China is the obvious example in that regard, but within the next decade, Britain is likely to drop from 5th largest national economy, to 12th or 15th largest national economy, as countries like Mexico and South Korea overtake it. That is inexplicable on the basis of a mercantilist centre-periphery or dependency theory of imperialism.

In Theories of Surplus Value, Marx explains that the reason that the Physiocrats were able to advance theoretically beyond the English mercantilists, was that England had developed as a mercantile nation, that made its profits from its global trading activities, as it took over from Holland in that regard. In France, however, capitalism developed within agriculture, and it was clear to the Physiocrats that surplus value was created not by exchange, but by production.

The centre-periphery or dependency theory ends up adopting this mercantilist approach for similar reasons. It starts from a moralistic and political objection to “imperialism”,by which it really means a group of powerful capitalist states within the global hierarchy of states, and a crude “anti-capitalism, and then seeks to explain their power and economic growth, not as Marx does, by analysing the tremendous revolutionising power of capital itself in expanding the productive forces, but by ridiculously claiming that it comes from screwing more and more surplus out of countries that were grindingly poor, and unable to produce much in the way of surplus value in the first place, and so could hardly be the source of increasingly huge levels of surplus value elsewhere in the global economy.

Even as Britain became ever richer as its capital expanded, due to ever increasing masses of surplus value being accumulated, the mercantilists and advocates of profit arising from exchange rather than production, continued to claim that it was exchange that was the source of profits. The proponents of centre-periphery and dependency theory merely follow in their footsteps. It is economic theory driven by political moralism and dogma.

Boffy, I’m not sure what you mean by either “Stalinist” or “effectively developed,” but that’s not important. Center/Periphery theory is being even more effectively today by revolutionary socialists. Marx, who was a revolutionary socialist, made it clear as early as the Manifesto (and more pointedly later) that capitalism can only be understood globally. Rosa Luxemburg based her work on imperialism on that premise–and on her view (that I think Marx shared) that from the beginning the capitalist system evolved in tandem with the colonial/imperial exploitation of non-capitalist systems of production (in terms of primitive accumulation in all its facets–and tries to continue developing that way).

It seems that the difference between the two sides of the argument here is that one views the imperial system from the point of view of the imperial centers, and the other views the imperial centers from the point of view of the periphery. Dialectically speaking, both are correct. The way I read Michael, he seems to see things that way…

One last point, by someone who grew up on the Monthly Review: Sweezy and Baran, despite living in the belly of the beast during its “golden era,” remained adamant that they never abandoned Marx’s labor theory of value. Nor do I believe that they abandoned the theory of the tendency of the rate of profit to fall. Nor do I believe either would have been surprised by its rousing manifestation (like the return of the repressed) after the war economy boom.

One last, last point: only the blind could not see the pro-imperial bias of the majority of the white American working class of the United States, even during the period of de-industrialization. I don’t know about English jingoism. …But things are changing.

The bribe, transfer of wealth or whatever you want to call it is explained here as simply as i think it can be done:

“Buy American” is a dumb idea. It would not only not create prosperity, it would cost jobs and make us all poorer. On my Fox Business show last week, David R. Henderson, an economist at the Hoover Institution, explained why.

“Almost all economists say it’s nonsense,” he said. “And the reason is: We should buy [and it goes without saying produce] things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”

Super exploit workers in the South, and the American worker’s money can buy more stuff. Jobs not a problem, because buying more stuff means job creation in America (because American capitalists are innovative and will specialise, make up new services etc.) Furthermore, there will be increased demand coming the other way from the South for those advanced, specialised American services made by incomparably skilled, productive and innovative American workers, as explained by another economic beacon in WSJ:

“The service sector will be reshaped by international developments, too. But just as low-wage China has not taken all of our manufacturing capability, low-wage India is not going to take all of our service sector production. Service producers will become even more specialized and will have to seek new ways of improving their efficiency and productivity. (Productivity in the service sector has notoriously lagged behind that in manufacturing.) As long as the American workforce retains its high level of skills, and remains flexible as firms position themselves to improve their productivity, the high-value portion of the service sector will not evaporate … First, consumers will be provided with the services they demand, at lower prices. As many businesses themselves purchase services, their lower costs will result in savings that can be passed on to consumers. If a capable radiologist in India can read x-ray pictures at a quarter of the cost of doing so domestically, important health-care services can be delivered at lower cost to everyone, putting a brake on exploding medical costs.
Second, U.S. exporters of goods and services will benefit from the extra income generated abroad. The outsourcing of services to India counts in the U.S. balance of payments as an import of services. If we are going to start importing large amounts of such services, these imports must be paid for by exports of something. The dollars being spent by firms to purchase these services will come back to the U.S. either in the form of demand for U.S. goods (our exports to India) or foreign investment in the U.S.” http://www.wsj.com/articles/SB107525219024013636

The American worker gets a win in that he can buy more stuff, the primary bribe, but he gets another win as long as he is making some small effort to keep his competitive edge and grab the best, highest paid jobs in the globalised economy in perfect harmony with his innovative American capitalist boss, who only has to display the slightest home bias at some point in the process for the fairy tale to come at least partly true. This is how the higher segment among workers in the North gets a share of the pie.

“The American worker gets a win in that he can buy more stuff, the primary bribe, but he gets another win as long as he is making some small effort to keep his competitive edge and grab the best, highest paid jobs in the globalised economy in perfect harmony with his innovative American capitalist boss, who only has to display the slightest home bias at some point in the process for the fairy tale to come at least partly true. This is how the higher segment among workers in the North gets a share of the pie.”

Except that, point for point, is exactly what is not happening: “good jobs” with benefits are declining; union membership has fallen precipitously; real wages are below their peak, a peak that occurred over 40 years ago, EVEN when adjusted for benefits; employers are reducing benefits and requiring greater “co-payments,” eliminating defined benefit pension plans, substituting, at best, defined contribution plans, if not eliminating everything, or at best substituting 401k, 457b, self-funded retirement plans. The obligations of the number of defaulted, abandoned pensions handed over to the Pension Benefit Guaranty Corporation far exceeds its resources, and that doesn’t include the woefully underfunded pension plans of local government employees. Permanent type jobs, with a “full” work week have declined, average working hours have declined in the US among production workers; temporary employment, and less than 40 hour/week jobs account for much of the increase in employment (if not the majority, need to go back and review the numbers); welfare has been slashed; food stamp usage among those with jobs has increased dramatically (thank you Wal Mart) etc. etc.

So I know it’s just thick of me to insist that our “theory” have something more than just a random and tangential contact with material reality, so call me old-fashioned, but Claus’ description above has absolutely nothing in common with what has taken place in the US, long term since the breaking of the 1974 strike wave, or short-term since 2008.

If the impacts of the super-exploitation are NOT what you say they are, then don’t you think that that puts a question mark in front of, and behind, the entire theory?

I’d agree this isn’t happening either: “If a capable radiologist in India can read x-ray pictures at a quarter of the cost of doing so domestically, important health-care services can be delivered at lower cost to everyone, putting a brake on exploding medical costs”. Medical “costs”, that is, surplus profits, “continue to explode” here in the USA. And this is generally true of what Ben Fine called “systems of consumer provision” – education, food, housing, transportation, health care. All highly expensive and (in transportation especially) destructive. All subsidized in part by overseas labor arbitrage that is also a prime source for the surplus profits. And all vitally connected with the reproduction of labor power.

“If a capable radiologist in India can read x-ray pictures at a quarter of the cost of doing so domestically, important health-care services can be delivered at lower cost to everyone, putting a brake on exploding medical costs”

It should be noted that said radiologist, while looking at x-ray pictures of US citizens is not looking at x-ray pictures of Indian citizens, who have even worse health provision than the USA!

The richer you are, as either a nation or individual, the more the world production system serves your needs, relative to others.

That’s an interesting point, and no doubt true– that the availability of technically intensive medical care is less available in India than the US.

The issue, however, is whether the “patient” benefits from the outsourcing to India. NYU (to use a local example) Medical Center might benefit, the insurance company might benefit, but a) the cost differential was not critical, important, to the development of original technology, or the proliferation of the technology; b) the US citizen does not realize a benefit from the lower compensation of the radiologist in Mumbai, as increases in medical costs outstrip rates of increases in other “necessities” annually and in multiples c) Outsourcing, in this instance, no more represents a “value transfer” to the “patient” than does the introduction of any new technology into a production process that reduces the amount of variable capital required represents a value transfer.

This “lower cost” produces also yields sooner or later a reduced rate of profit, but because of the technical intensity, size of the capital required, that profit has to be equalized over time– hence the “premium” price of the product to the patient in the “home” country, regardless of the source of the labor. .

What strikes me about the “super-exploitation” argument is how it so readily accepts the bourgeoisie’s fantasy explanation that the “free movement” of capital “maximizes benefits” for “everyone” as it makes goods cheaper for “the consumer”– and the bourgeoisie wish everyone would regard himself/herself as a consumer– ignoring class distinctions; ignoring the role of production.

That’s not my argument Claus. I put items in quotation marks because they are not my arguments, but represent a parallel, and an analogous flow into the stream that says workers in advanced countries are “bribed” by the profits extracted through “super exploitation” AND that such super-exploitation is the main source of the profits of advanced capitalist countries. You don’t see a parallel there? In the argument of the “globalists”– that globalization is “good” for workers in the “advanced” countries because it provides them with cheaper shirts, cheaper goods? That’s odd, I think, because didn’t you make that argument using cheaper shirts? That’s even more odd because you quoted Fox News the Hoover Institute and the WSJ in making that exact argument:

” “Buy American” is a dumb idea. It would not only not create prosperity, it would cost jobs and make us all poorer. On my Fox Business show last week, David R. Henderson, an economist at the Hoover Institution, explained why.

“Almost all economists say it’s nonsense,” he said. “And the reason is: We should buy [and it goes without saying produce] things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”

Super exploit workers in the South, and the American worker’s money can buy more stuff. Jobs not a problem, because buying more stuff means job creation in America (because American capitalists are innovative and will specialise, make up new services etc.) Furthermore, there will be increased demand coming the other way from the South for those advanced, specialised American services made by incomparably skilled, productive and innovative American workers, as explained by another economic beacon in WSJ:

“The service sector will be reshaped by international developments, too. But just as low-wage China has not taken all of our manufacturing capability, low-wage India is not going to take all of our service sector production. Service producers will become even more specialized and will have to seek new ways of improving their efficiency and productivity. (Productivity in the service sector has notoriously lagged behind that in manufacturing.) As long as the American workforce retains its high level of skills, and remains flexible as firms position themselves to improve their productivity, the high-value portion of the service sector will not evaporate … First, consumers will be provided with the services they demand, at lower prices. As many businesses themselves purchase services, their lower costs will result in savings that can be passed on to consumers. If a capable radiologist in India can read x-ray pictures at a quarter of the cost of doing so domestically, important health-care services can be delivered at lower cost to everyone, putting a brake on exploding medical costs.
Second, U.S. exporters of goods and services will benefit from the extra income generated abroad. The outsourcing of services to India counts in the U.S. balance of payments as an import of services. If we are going to start importing large amounts of such services, these imports must be paid for by exports of something. The dollars being spent by firms to purchase these services will come back to the U.S. either in the form of demand for U.S. goods (our exports to India) or foreign investment in the U.S.” http://www.wsj.com/articles/SB107525219024013636

The American worker gets a win in that he can buy more stuff, the primary bribe, but he gets another win as long as he is making some small effort to keep his competitive edge and grab the best, highest paid jobs in the globalised economy in perfect harmony with his innovative American capitalist boss, who only has to display the slightest home bias at some point in the process for the fairy tale to come at least partly true. This is how the higher segment among workers in the North gets a share of the pie.”

Perhaps you didn’t really mean to quote Fox, Hoover, WSJ approvingly?

I’m not trying to trick or maneuver anything. I’m trying to determine the validity of an hypothesis.

“It should be noted that said radiologist, while looking at x-ray pictures of US citizens is not looking at x-ray pictures of Indian citizens, who have even worse health provision than the USA!”

On one level true, in that a person is doing A they are not simultaneously doing B. But, on a more significant level completely false. If the radiology department remained in the US or whatever, the Indian radiologist, a) would not have a job, and so still would not be looking at the x-rays of Indian patients, b) the capital would not exist in India, because by the same token it cannot be employed in function A and simultaneously in B, and c) without that capital, and the employment provided to the radiographer, the level of demand in India would be lowered, and so the potential for other employment for workers in India would be reduced.

When Britain established railways in India, it did so to more quickly transport raw materials out of the country to Britain, and to transport British manufactures sent to India around the country. But, in the process it also created jobs for Indian train drivers and so on, and it also meant that Indian producers were enabled to transport their commodities more effectively and cheaply.

If radiology equipment is established in India for the purpose of more cheaply analysing the x-rays of US citizens, it not only provides employment for India radiographers who thereby have revenue to expend on other commodities produced by other Indian workers, but it also means that a piece of equipment exists in India to analyse the x-rays of Indian patients that might not otherwise have existed.

Given the level of Indian development, now, we might assume that an Indian capitalist is quite capable of providing such capital, and establishing such a service. But, the same argument applies. Firstly, the business may not have existed were it not for the potential of sufficient demand from more developed economies, secondly, the worker is thereby still employed, and aggregate demand is raised, and thirdly, having established the business, it exists as a potential for analysing Indian x-rays, and can do so more cheaply because undertaking such examination on a large scale provides economies of scale, which makes it more likely to b able to develop a domestic market.

Am I the only one more than a tad incredulous at Boffy Pangloss’s little fairy-tale about what a great benefit the British Raj was for the workers and people of India? Am I the only who finds this allegory of progress not only a denial of the real history of the impact of British rule in India, but also a complete distortion of what capitalism requires to feed its accumulation? Like…?

Like for example, not just the dispossession, but the immiseration of the direct producers; like for example the destruction of the commune based economy that was existent prior to the tying of India to the stake of British capitalism? Like the famines produced and reproduced including the one of 19342-1943? Like the racism intrinsic to the “benefit” of the construction of the railways? Like the failure of British capitalism, once having ruined the direct producers, to reproduce “itself”– its industrial self (which Marx thought it would), and its inability to capitalize agriculture?

Well, next up, let’s point out what a benefit construction of the Suez Canal was for the Egyptian fellahin, rounded up and forced into corvee type labor for the greater glory of empire.

If ever one was tempted to utter the words “And this crap passes for Marxism,” it is when reading Boffy’s little parables about the most good for the most people most capitalism.

The point is the so-called “benefits” of capitalism only exist if and when capital is overthrown; is abolished.

The railroads of India, encapsulated within the limits of British imperialism, exist as a monument not to progress but to the backwardness, the backward technology and the backward social relationships of capitalism that “pretend” to be an “advancement” when all that has been advanced is the depreciation of the population.

Sartesian, perhaps I am wrong. Perhaps you just loose the thread of the argument constantly. So let me catch you up.

Wherein consists the “bribe” was the question.In it was two question 1. How is the transfer even possible – the ‘mechanism’. 2. To which extent has it actually happened.

So, I finally went and quoted the bribers, so you shouldn’t think I or Lenin or John Smith made it up. That was the context.

Is it wholly positive view of globalisation? Yes, because I am quoting the bribers! Is that the same rosy view held by Lenin, John Smith (or me)? No. At best you (super) exploit one worker to give to another.

On your view the workers of the South are getting the sweetest deal, because they’re less exploited relative to productivity than the ‘rich’ workers in the North. That’s a rosy view of globalisation, and very close to the view of the bribers.

Or perhaps, it’s just the shock of recognition on your part and you’re uncomfortable with your own statements. You quoted the bribers, indeed. And you cited them, in your own words to explain a transfer, and the benefit it provides the workers in the advanced countries. You wrote:

“The American worker gets a win in that he can buy more stuff, the primary bribe, but he gets another win as long as he is making some small effort to keep his competitive edge and grab the best, highest paid jobs in the globalised economy in perfect harmony with his innovative American capitalist boss, who only has to display the slightest home bias at some point in the process for the fairy tale to come at least partly true. This is how the higher segment among workers in the North gets a share of the pie.”

following quoting paragraph after paragraph about how the US worker benefits from globalization. You wrote: “…in perfect harmony with his innovative American capitalist boss…..”??? “for the fairy tale to come at least partly true….” Look around Claus, exactly where is that fairy tale coming partially true? “The best highest paid jobs”?? US workers haven’t been the highest paid in the globalized economy for years. The number of US production workers has been halved in the last 30 years; wages in the service sector are on average less than in the industrial sector. The WSJ ran a very important article about the long-term impact of layoffs on wage levels, showing that those who are able to obtain subsequent do so at sharply reduced rates of compensation and (almost) never “catch up” to the rate they had received prior to the lay-off.

“On your view the workers of the South are getting the sweetest deal, because they’re less exploited relative to productivity than the ‘rich’ workers in the North. That’s a rosy view of globalisation, and very close to the view of the bribers.”

More bollocks. I’ve never said or implied anything, or quoted anyone from Fox News, the Hoover Institute, or the WSJ, to indicate that I hold that view. I most definitely do not think workers of the “South” get a sweet deal.

“This is ultimately a question of value theory”–

No kidding. That’s why my original question was about the extraction of surplus value in the steel industry– 30 hrs/ton in China; 1 hr/ton in So. Korea; 1.9 hr/ton in the US.

“Look around Claus, exactly where is that fairy tale coming partially true?” But we are in agreement on that I understand now that you’re just a very simple fellow, who doesn’t recognise the sarcasm in phrases like ‘innovative capitalist boss’ 🙂

I am not an expert on the steel industry, so it is a pity nobody has been able to persuade you to give up your ‘laser focus’ on that.

Indeed, as I pointed out in my very first post– a simple question from my simple mind. What a pity you’re too sophisticated to have noticed.

But anyway, so which is it, Claus, do you think “super-exploitation” of the global South 1) is the major source for capitalist profits 2) “benefits”– “transfer value to”– provides higher wages for workers in the so-called North–

I have never denied super-exploitation exists. As I pointed out in the original exchanges with John Smith and others, super-exploitation is not confined to the “Global South.” It exists at home, wherever your home might be.

The existence of “super-exploitation” has never been a question. The presentation of almost all wage-labor as conducted in the “global South” on the basis of super-exploitation is in question. That such super-exploitation is the DOMINANT source of profitability to the advanced capitalist corporations and countries is in question. That workers, as a class, in the “global North,” not some sliver or fraction of the class, receives improved, and improving benefits– whether compensation, or social benefits such as medical care, education, etc–. is in question.

Fair enough, we certainly agree on the first part. To discuss competently whether (super) exploitation of the South is the dominant or at least a significant source of whose profits/wages at what point in time probably requires us to invest in John Smith’s book, since he has supposedly done the basic numbers work.

Reblogged this on bolshevikpunx and commented:
“In a way, this is a revival of the so-called ‘dependency theory’, where it is argued the rich imperialist powers are rich only because of the poor oppressed nations and economies. To this is added the argument that the working class of the North are better off only because of the super-exploitation of the South and so are no longer a progressive force in the struggle to end capitalism.

Well, I argued against that view. First, Marx’s theory shows that there will be a tendency to equalise the rate of profit between capitals (even under monopoly capital) – indeed this is how the higher rates of exploitation in the South end up in the profit rates of the North. But this process does not touch the sides of the wages of the workers of the North – it is a redistribution of surplus value between capitalists (and capitalist states).

And empirically, this is also true. The organiser of the workshop, Simon Mohun, published a paper a few years ago that showed only 1% of working people in the US got income from capital (profit, interest and rents) as their main source of income. The rest of Americans had to work to make a living. Sure, their higher wages and their social benefits may indirectly come from the super-profits of the multi-national companies they work for – but that is the result of the class struggle over the share of value going to wages, not directly as a result of imperialist exploitation.

Imperialism has two Achilles heels. The first is the tendency of the rate of profit to fall as capitalism accumulates. Indeed, imperialism is a major counteracting factor to that most important contradiction of capitalist accumulation. The second is the proletariat – the gravediggers of capitalism – who are still growing in size across the world. John Smith showed that global proletariat has never been larger in the history of capitalism. In that sense, Marx’s prophecy in the Communist Manifesto 160 years ago is confirmed. Sure, the majority of the proletariat is now in the South and not the North. But, in my view, that does not mean the workers of the North will play no role in ending capitalism. On the contrary, they are the key to ending imperialism in its centre.”

Michael — have you read “Southern Insurgency: The Coming of the Global Working Class” by Immanuel Ness”? He’s of the Monthly Review/”monopoly capitalism” school but much of book aligns with what you say in this post.

“Indeed, in Volume III, Marx explains that investments in colonies, where the rates of profit were higher, are a factor that counteracts the law of the falling rate of profit.”

But, it depends what is being spoken of in terms of these investments, as Marx says. If we are talking about investment of the latest technology, and simply taking advantage of low paid, unskilled machine minding labour, it may be true that the rate of profit is thereby higher, because the rate of surplus value is higher. But, that may not be the case, because as Marx also points out in Volume III, if the level of productivity in other industries within that economy is very low, so that the cost of producing wage goods is high, workers in that economy may need to work a greater part of the working-day just to reproduce the value of their labour-power, even if the value of that labour-power is low, due to a very limited standard of living.

Again, this is one reason that such foreign investment tends to go from one developed economy to another, rather than to less developed economies, because in the latter, the general level of social productivity is low, and along with the rate of surplus value and of the average annual rate of profit is also low, whilst the rate of profit, i.e. the profit margin tends to be high. Large scale foreign capital investment into such economies by industrial capital only occurs when a certain level of social productivity has been reached, when infrastructure and so on has already been developed.

As Marx points out, the rate of profit in more primitive economies is only ever high, when it is possible to have an extremely high rate of surplus value, based upon grindingly low standards of living, and extremely long working days, so that absolute surplus value is maximised. But, as Marx points out the extent to which this is possible is very limited. There are only so many hours in a day, and there are only so many worker in an economy, so the social working-day can only be extended to a given physical maximum. Yet, with low social productivity, a large part of it will be taken up with simply reproducing labour-power. That is not the case with the extraction of relative surplus value. A social working-day of say 6 million hours, might provide 3 million hours of surplus value, but a rise in social productivity might reduce necessary labour to say 2 million hours, so that even as the workforce and working day remain constant, the rate of surplus value rises from 100% to 150%, and the amount of surplus value rises by 50%. There is no reason with rising productivity, why a slightly growing labour force, and so rising level of new value, will not see the necessary social working day continue to shrink further and further, so that the rate of surplus value, and mass of surplus value continues to rise.

For example, if 1 million workers produced 6 million hours of new value, and 3 million hours of surplus value, a rise in the workforce to 10 million would produce 10 million hours of new value, but rising productivity might reduce the necessary social working day to 1 million hours, so that the mass of surplus value now amounts to 9 million hours, and the rate of surplus value rises to 9000%.

In discussing the situation in comparing two different countries Marx writes, Volume III.

“Let a capital of 100 consist of 80 c + 20 v, and the latter = 20 labourers. Let the rate of surplus-value be 100%, i.e., the labourers work half the day for themselves and the other half for the capitalist. Now let the capital of 100 in a less developed country = 20 c + 80 v, and let the latter = 80 labourers. But these labourers require 2/3 of the day for themselves, and work only 1/3 for the capitalist. Everything else being equal, the labourers in the first case produce a value of 40, and in the second of 120. The first capital produces 80 c + 20 v+ 20 s = 120; rate of profit = 20%. The second capital, 20 c+ 80 v+ 40s= 140; rate of profit 40%. In the second case the rate of profit is, therefore, double the first, although the rate of surplus-value in the first = 100%, which is double that of the second, where it is only 50%. But then, a capital of the same magnitude appropriates the surplus-labour of only 20 labourers in the first case, and of 80 labourers in the second case.”

But, in Volume I, Marx sets out the way machinery introduced by particular firms, makes the labour of its workers like complex labour compared to its competitors. Marx points out that this situation applies also to the different levels of productivity of countries resulting from varying degrees of development of their productive forces. The consequence is to create a modification of the Law of Value, so that an hour of labour in one country produces more value than an hour of labour in some other country, where labour productivity is lower.

“The average intensity of labour changes from country to country; here it is greater, there less. These national averages form a scale, whose unit of measure is the average unit of universal labour. The more intense national labour, therefore, as compared with the less intense, produces in the same time more value, which expresses itself in more money.

But the law of value in its international application is yet more modified by the fact that on the world-market the more productive national labour reckons also as the more intense, so long as the more productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.

In proportion as capitalist production is developed in a country, in the same proportion do the national intensity and productivity of labour there rise above the international level. The different quantities of commodities of the same kind, produced in different countries in the same working-time, have, therefore, unequal international values, which are expressed in different prices, i.e., in sums of money varying according to international values.”

(Capital I, Chapter 22)

If we proceed on the basis of what Marx says in Volume I, we arrive at a completely different conclusion to that he describes in Volume III.

He sets out that in the one case the capital is comprised 80 c + 20 v, and in the other 20 c + 80 v. In the former country a total of 40 hours of labour processes £80 of constant capital. In the latter, 120 hours of labour process just £20 of constant capital. On that basis 1 hour of labour in the first country processes 12 times as much constant capital as an hour of labour in the second. On a purely value basis then, labour in the first country is 12 times as productive as that in the latter. But, this underestimates the difference. As Marx repeatedly points out, as the technical composition of capital rises, the organic composition rises but not in the same proportion, because the constant capital becomes cheaper, it is used more efficiently, and fewer better machines replace a larger number of less efficient machines.

But, solely on the basis that labour in the former country is just 12 times more productive than in the latter, and that, therefore, on the basis of what Marx sets out in Volume I, the value of an hour’s labour in country 1 is equal to 12 hour’s of labour in country 2. In that case what we would actually have is.

Country 1

c 80 + v 20 + s 460 = 560, s’ = 2300%, r’ = 460%

Country 2

c 20 + v 80 + s 40 = 140, s’ = 50%, r’ = 40%.

So, in other words, the workers in country 1 undertake 40 hours of labour, but because the value of an hour’s labour for country 1 is equal to 12 hour’s of labour in country 2, this 40 hours creates a value equivalent to 480 of labour in country 2.

If the workers in country 1 were only paid the value of their labour-power they would be paid £20, which, as with the example Marx gives of the firm that enjoys the advantage of being the first to introduce a machine, means that the capitalists in country 1 would make an even greater rate of surplus value.

And Marx points out in this relation contrary to Carey, that as this level of productivity in the more developed economy rises, the value of labour-power falls, even as the standard of living rises. That is why, Marx explains although British workers in textile factories were paid 50% more than their European counterparts, the product of the British workers was still much cheaper, and more profitable, and the rate of profit of British textile producers higher. Henry Ford understood this aspect of Marx’s analysis when he raised the wages of his workers to the $5 day, because the additional productivity he obtained, increased his rate of profit.

It is generally the case, on the basis of Marx’s analysis that it is workers in the more developed economies that are more intensely exploited in his scientific sense, i.e. they face a higher rate of surplus value. The workers in less developed economies have low standards of living, not because they are more exploited, but because they are less exploited, i.e. the level of social productivity, and so the rate of surplus value is lower. As Marx explains above, it means that the value of the product of an hour of their labour is less than the value of the product of an hour of labour of workers in more developed economies, so that even if they work very long hours, the value of their output is lower, and the potential for surplus value is also correspondingly lower.

As Marx points out, in Volume I, it may be that a more developed economy may benefit if world prices are determined by the less developed economies, so that it thereby enjoys surplus profits arising from its higher level of productivity. On the other hand, if the global economy is dominated by the production of developed economies, then global commodity prices will be determined on the basis of its higher level of productivity, whereas the less developed economies will sell their commodities at this global price of production, which may be well below the individual value of those commodities produced in the less developed economy, so that the latter’s potential for profits is highly reduced.

In either case the poverty of the less developed economy is not the consequence of being in the periphery, and any kind of super exploitation in Marx’s scientific sense, but is rather due to its low level of development, its low level of productivity, and so of rate of surplus value, and the lower value of the product of an hour of its labour compared to that in a developed economy. Its an indication that they need more investment of capital, and preferably more modern foreign capital, not that they are in some way transferring value to the developed world, by some curious super exploitation, that appears like a magic bowl that continually fills up no matter how much is taken from it.

And this: ” As Marx explains above, it means that the value of the product of an hour of their labour is less than the value of the product of an hour of labour of workers in more developed economies, so that even if they work very long hours, the value of their output is lower, and the potential for surplus value is also correspondingly lower.”

Is where I disagree with the “classicists.” Marx uses perhaps the most poorly defined, and least examined, category in his entire critique of capitalist production, the “intensity of labor” as a basis for this conclusion. Marx refers to differences in intensity from the “average” without ever explaining how the average is determined and how differences in intensity can even be identified in the extraction of surplus value. Greater “Intensity” in the production process of capital (production process being the unity, coincidence, of the labor process with the valorisation process) according to Marx yields a value within a period of time greater than the average. How is this even possible?

When, back in the day, work was done “on the line” in an auto plant, and the “belt” was accelerated so that there were more chassis per hour requiring more welds or bots per hour, how does that produce more value in the hour? An hour is an hour, and whether 50 chassis are welded or 30 chassis are welded, the value of the labor consumed in that hour remains the same.

And how does that “intensification” through speed up differ in any way shape or form from the application of greater portions of fixed capital, of technology– reducing the number of welds required, or reducing the number of welds requiring HUMAN intervention?

Is the expenditure of labor-power “more intense” when fewer workers are performing less operations, or steps, in the process?

Intensification is, IMO, pretty much indistinguishable from greater rates of constant capital in the production process, and I think it’s really problematic to claim more “new value” is extracted in an hour.

The issue is how quickly can the workers reproduce the value equivalent to their wages. And that leads Marx to conclude, rightly, IMO, that with advances in capitalist production, the value of labor-power is depreciated relative to the total value, as a portion of the total value— not that the value of the product of an hour of labor is less in “undeveloped capitals;” but that the value of labor power is depreciated in relation to the total product with the advancement of capital, and improvements in the rate of extraction of surplus value.

I think that there are certain ambiguities in Marx’s exploration of surplus value and we should be really cautious in arguing that the value of the PRODUCT of an hour of labor in the VW plant in Mexico is less because the rate of surplus value is less. The whole point of the migration of capital is to combine the advanced production techniques with the reduced wage to aggrandize greater rates of surplus value.

[…] These quotes quite nicely encapsulate the historical situation that we find ourselves in. Neoliberal and austerian policies have never made sense and have been debunked a long time ago, but now they also have been delegitimized. The elites have lost credibility, political legitimacy and the ability to dictate outcomes. What the elites have shown is complete policy failure, nothing but a series of economically catastrophic and devastating failures everywhere. Clearly, Europe needs to put its house in order. The macroeconomic imbalances need to be addressed, one way or another. But this is not enough. When, for example, the World Bank predicts (and that was in 2014) that up to 30% of all agricultural land in Africa risks disappearing by 2030, we better start preparing for it. Compared to such enormous challenges, a Brexit has no real significance. If Lebanon, a country the size of Devon and Cornwall together (smaller than Wales), is capable of housing 2.000.000 refugees, while Britain is panicking over a ‘migrant crisis’ and concedes, apparently with great trouble, to accept (not house!) 20.000 people by 2020, the future does indeed looks bleak. It is just a matter of fact that some countries are running out of water or food or both and that there is increasing risk for ethnic strife, violent conflict and war. Does Europe have a plan? Do any of the member states? We are even too afraid to think about it. Neoliberalism has to be rolled back on a global scale and this cannot happen without a fight that is truly global in nature. The whole model of global development has to change. This sounds absolutely formidable, but it will not be possible to bring back order into the world without addressing trade and development, financialisation, militarisation, human rights, global inequality and climate change (see here). […]

Sorry, I’ve been away and have only just come upon this post. It raises many questions; here I restrict myself to two of them.

1. Michael repeats Lucia Pradella’s claim that, “in Volume III, Marx explains that investments in colonies, where the rates of profit were higher, are a factor that counteracts the law of the falling rate of profit.” This is not true. What we get in Volume III is not an explanation, but an extremely fleeting mention. Here is the passage to which Michael and Lucia refer:

“As far as capital invested in colonies, etc. is concerned, the reason why this can yield higher rates of profit is that the profit rate is generally higher there on account of the lower degree of development, and so too is the exploitation of labor, through the use of slaves and coolies, etc.” (Marx, Capital, vol. 3, 345)

In my book (Imperialism in the 21st Century, p244) I comment:
“Close examination of this passage reveals not one but two reasons why capital invested in colonies may return a higher than average rate of profit. Lower degree of development refers to low productivity, capital-intensity, etc., and extends to the colonies the same unequal exchange effect previously identified by Marx in trade between more and less advanced capitalist nations. It is the second part of the sentence that attracts attention. Marx says that “the profit rate is generally higher [in the colonies] … and so too is the exploitation of labor, through the use of slaves and coolies, etc.” The few words in this single sentence are the only place in the whole of Capital’s three volumes and in its fourth volume, Theories of Surplus Value, where Marx mentions the positive effect on the rate of profit in the imperialist nations of higher exploitation in subject nations.”
… to which I added this footnote:

“It is noteworthy that Marx talks about the exploitation of labor, not the rate of exploitation, and labor, not labor-power. That this might be due to the provisional, draft form of the original can be discounted—even in rough drafts, Marx is meticulous in his choice of words. It is more likely that he deliberately chose not to use the developed capitalist form of these categories, because in the colonies, at that time, the commodification of labor-power and the universalisation of the capital/wage labor relation had a way to go. This again underlines the evolutionary distance separating the past three decades from the stage of capitalist development observed and analyzed by Marx.”

2. Michael says “John argues that imperialist exploitation is now predominantly ‘super-exploitation’… Other forms of exploitation under capitalism: absolute surplus value (namely through maximising the working day); or relative surplus value (namely lowering the cost in hours for maintaining the labour force in a given day); according to John, these have become secondary forms of exploitation under modern imperialism.”
I’m sure that Michael agrees that great care and precision is necessary when dealing with these concepts, and I’m therefore disappointed that Michael repeats this crude mischaracterisation of my argument – I’ve already made two attempts to correct him on this, in a previous blog comment and at the IIPPE workshop itself. I argue that the vast global shift of production to low-wage countries signifies that capitalists in North America, Europe and Japan have become very much more dependent on super-exploited workers in low-wage nations (‘super-exploited’ because their rate of exploitation is higher than in their own countries – precisely why production has shifted), and this is why, during the neoliberal era, capitalism has become more not less imperialist. I still don’t know whether Michael agrees with this. My book further argues that shifting production to low-wage countries has become an increasingly-favoured alternative way of cutting costs and boosting profits than investing in productivity-expanding technology – which is why accelerated outsourcing coincided with a historic collapse of capital investment in the imperialist countries. I therefore argue that the substitution of relatively high-wage workers in imperialist countries with low-waged, more intensely exploited, workers in oppressed nations has become the predominant means of *increasing* the rate of exploitation. My argument therefore hinges on the *relative* importance of the three means of *increasing* surplus value, and makes no claim that one, in absolute terms, is more important than the other.

To summarise, four propositions:

a) in Capital, Marx identified not two put three ways to increase the rate of surplus value, and that while he repeatedly emphasised the importance of the third (reducing wages below the value of labour power) each time he explained that examination of this was excluded Capital because his ‘general theory’ required the assumption that all commodities sold at their value;

b) it is true, as Lucia argues, that in Capital Marx does not analyse a single national economy, but neither does he analyse the concrete global economy of his day (still less, obviously of our day) – the glancing reference to ‘coolie labour’ alone is proof of this. He analyses an idealised unitary economy in which all factors of production, including labour, are freely mobile (i.e. he excludes all forms of monopoly) – as is reflected in his assumption that labour power has but one value;

c) that replacing labour power of higher value in imperialist countries with labour power of lower value in Bangladesh, China etc is tantamount to, i.e. has the same effect on the rate of exploitation as, the reduction of wages below the value of labour power and therefore corresponds to the third form of surplus value increase;

d) that this is therefore a new fact not contained in the theory of value presented in Capital. This does not mean that Marx was wrong, it means that capitalism itself has evolved, and that the general theory presented in Capital need to be critically developed to take account of this evolution.

This is very far from the last word on this topic, in fact it gets us only to the starting point of the conversation that we need to have. To avoid this debate going around in circles, I request that Michael unequivocally states his opinion on these four propositions, because I’m still not sure where he stands. In fact that I think there is a bit of fence-sitting going on…